Colombia pro-mining referendum will not soothe global miners

AngloGold did not campaign against the Cajamarca vote, keen to avoid accusations of meddling in local democracy. (Image courtesy of AngloGold Ashanti.)

VETAS, Colombia April 10 (Reuters) – Jose Alberto Gamboa, whose smile flashes the gold he has spent his life digging from Colombia's frosty Andean mountains, says he will do whatever it takes to protect his town's only industry: mining.

"We would get guns and go to war," the grizzled 67-year-old miner said during his break at the Queen of Gold mine, near Vetas, on the steep slopes of Santander province. "How else could we feed our children?"

Gamboa is not alone. Vetas municipality will soon hold Colombia's first-ever, and so far only, local vote aimed at enshrining the right to mine, in sharp contrast to a wave of environmentally focused anti-mining referendums over the past year that spooked investors and forced a major gold project to close.

The pro-mining referendum in Vetas may prompt more elsewhere. But pro-mining votes seem set to benefit local companies and mining in streams and on mountainsides, not multinationals including Continental Gold, EcoOro , Red Eagle and AngloGold Ashanti, which pulled out of a $360 million investment in Cajamarca after an anti-mining vote last year.

Miners have called for clarity on whether the referendums, be they pro or anti-mining, are binding. But the government has failed to legislate the issue, which is dampening foreign investment at a time when Colombia is grappling with low growth.

"Just give us clear rules," said Juan Camilo Narino of AngloGold.

In all six votes held so far, locals voted against mining. Some 54 more votes are planned.

Though locals fear the fate of Cajamarca, whose economy nose-dived when AngloGold left, few municipalities have good relationships with multinationals and do not wish to back them in a vote. According to a recent survey, Colombians consider international miners arrogant and dishonest.

"It's not for the gringos who want to get all the money to take it out of Colombia," said Gamboa, a father of seven.

AngloGold did not campaign against the Cajamarca vote, keen to avoid accusations of meddling in local democracy.

The Mining Ministry promised a law to regulate use of the referendums, but it has yet to materialize. May presidential elections have dimmed hopes for a prompt solution.

Mining minister German Arce has said communities are free to hold the votes, but the choice to allow mining rests with the government.

"Laws are changed by Congress," Arce said at a recent industry event. "This isn't a problem the state resolves alone or companies resolve alone."

The mining ministry did not respond to a request for further comment.

Queen of gold

Locals also hope the pro-mining referendum will stymie new court rulings and environmental regulations that could close off more land, especially in places like Vetas and neighboring California, which have delicate, high-altitude wetlands.

This has already happened at Canadian miner EcoOro's Angostura project in California, which was cut in half by a 2014 constitutional court ruling that expanded wetland protections. EcoOro, which has invested more than $250 million in Colombia, including Angostura, is suing for $764 million in damages and declined to comment.

Colombia's government has until November to release the final wetland delimitation and residents fear a majority of the municipality will be included. A new government takes office in August and could influence the decision.

"We want the national government, the courts, public opinion to see that here in Vetas we want mining and we want to decide for ourselves," said municipal official Angelica Garcia. "If they restrict mining the municipality will disappear."

Mining accounts for some 90 percent of the local economy, Garcia said. The Queen of Gold, one of four local miners in the municipality, employs 60 people and is owned by a group of 12 families.

"We support the (pro-mining) vote but we're not interested in supporting any multinational," said partner Johanna Rangel, whose father helped start the mine.

In California municipality some still make their living panning for gold. Officials said the community has a fraught relationship with Minesa, the latest multinational to start a project there, pledging to directly employ 1,000 people.

California's mayor Hugo Lizcano said the company, owned by the government of Abu Dhabi through its investment arm Mubadala Investment Corp, caused "friction" with the community because it did not hire the number of locals it had promised.

Minesa, which is applying for the project's environmental license, plans to invest around $1 billion over the next five years, eventually producing 410,000 ounces of gold per year.

"Since we arrived in the area we've been interested in having a direct and clear dialogue with the communities," the company said in an email, adding it hoped a "large majority" of jobs would be filled by locals.

Red Eagle and Continental Gold did not respond to requests for comment.